Malaysia’s data centre blues: A spanner in the nation’s dreams (Part 2)
By Sharmila Ganapathy-Wallace April 27, 2017
- Inter-DC Network hasn’t lived up to MDEC’s expectations
- Loss of talent to Singapore is also a major concern
IN OUR previous article, we discussed the problems that have been affecting the growth and progress of the nation’s regional data centre ambitions.
Today, we take a look at how the local industry has progressed and the issues it faces as Digital News Asia continues its discussion with Malaysia Digital Economy Corporation (MDEC)’s head, data cloud, digital enablement, Tan Tze Meng.
Tan shares his insights on the local data centre industry and the direction it will likely take.
Hiccups with the Inter-DC Network
Digital News Asia understands from industry sources that the Inter-Data Centre Network initiative started in 2015, has not been able to fulfil its objectives due to data centre operators being unhappy with AIMS Cyberjaya Sdn Bhd being awarded the contract by MDEC to lead and deliver the initiative.
MDEC’s Tan admits that there are not many operators on the network so far and that they have one satellite farm with one major user only, despite five data centres being connected to the farm, which is in Cyberjaya.
Why is it they have only one user? “Well we think that at the moment a lot of people don’t really know about it yet, the model we were working with earlier was that each data centre was connected on the ring would actually go out and actively sell and market the solution to the customers. We are seeing that is not moving as fast as would like and that is why we are actually publicising it ourselves.”
“First of all, we don’t see the player that operates it as a major problem because they only operate on the network, they don’t operate on data centres so the data centres are the ones who actually have the final right to connect their customer to the network. So we actually have great difficulty understanding why they had a problem with it.”
So what is MDEC doing to push this thing forward? “Right now we are taking charge of the Inter-DC marketing network and so we are not waiting for the data centres. We want the end users to actually start asking for the services because for example if I were to ask for 1GB of bandwidth between any two buildings in Cyberjaya it will have a monthly cost of about RM20,000 a month. With the Inter-DC network we can bring it down to RM1,000 a month so I’m sure end user customers would want or be interested in that because if they can save money from that then why not?”
How will the Inter-DC Network benefit small and medium enterprises (SMEs)? According to Tan, the Inter-DC Network will come into play when the SMEs want to go online and get their products and services online.
“Very likely they would actually need to have their server inside a data centre so if the data centre is interconnected with the InterDC network they can actually get higher speed broadband at a lower price and that enables more SMEs to go online basically. It is not a direct benefit to the SMEs because they will not be directly buying the bandwidth. The hosting providers within those data centres will actually be able to save money on the bandwidth and hopefully they will past the cost savings on to their SME customers,” he explains.
Competition is inevitable
One question that is doubtless on everyone’s mind is what will happen to local data centre players once the data centre giants come to Malaysia. How will the local boys survive? “The internet is basically borderless, they are already losing players to cloud customers in Singapore so it doesn’t matter whether Amazon Web Services are in Singapore or in Malaysia because there is actually not much difference because we are in a borderless world.”
The only situation he thinks where there might be an impact is banking and financial services. “Banks typically want to have the data in country so that’s basically where it may happen but with that said banks moving to cloud is another story completely. Bank Negara Malaysia needs to publish guidelines on how banks can utilise cloud and until those guidelines come out banks are most likely to retain normal data centres rather than cloud.”
But he believes that banks taking to the cloud will happen sooner or later because the Monetary Authority of Singapore has already published guidelines for Singapore banks and financial institutions to adopt the cloud.
“That’s the thing about cloud it’s a matter of when. Actually, some of the data centre companies here are moving in that direction to try to hit off the competition by trying to make their own cloud solution so basically that’s the private cloud space. Moving into the future, most likely the cloud market will split into the public and the private cloud so certain companies will be more comfortable to have their certain solution of private cloud rather than public cloud.”
He explains that public cloud will be the likes of AWS with a giant global company that has presence everywhere. “Private cloud is for example, if I’m a data service centre I can set up a cloud infrastructure specifically for on customer. So the customer has the assurance that only his data is running on cloud and it’s not shared with anyone else.”
Does he have an idea when cloud will come to Malaysia in a big way? “We actually hope that something would happen this year,” he says.
There is a lot of buzz by local players that they want to be disaster recovery and business continuity sites. Is this workable and sustainable? Tan acknowledges at the moment it is a major challenge to build a proper disaster recovery site.
“The issue is the cost of bandwidth. For example if I have a large data centre and I need to have a proper disaster recovery centre I need to replicate the data and because the cost of bandwidth is so high I need to do a full recovery kind of scenario. I still hear of people having to courier things from a backup centre because that’s the only economic way to transfer large amounts of data. So it’s not a really big industry, it only accounts for about 6% of data centre revenues. And with cloud where disaster recoveries is taken care of by the cloud operator itself, I think you will see fewer people needing a dedicated disaster recovery facility.”
“Cloud is encroaching into that business; disaster recovery has multiple aspects but business continuity has a bigger picture so that will continue. It’s just that the physical backup of data and servers will no longer need to have another physical disaster recovery centre. It could be just all in cloud. That’s not something you bet to have a future on.”
MDEC’s wish list for the data centre industry
When asked if he has any wish list for the local data centre industry, Tan says that Malaysia really needs to have its own system for the data centre industry. “The way I look at things telecommunication are on the roads, highways and so on. The cities are actually the data centres so we cannot build a digital economy when our cities are somewhere else so we need to build our own cities.
“That’s where the economic activity is going to come from because in the digital economy value comes from the data centres and so I would like to see the local data centre industry mature to the point where they are actually providing the kind of solutions that customers want.
Private cloud, he says, is going to be a major part of the future of any data centre industry. It will always need to exist because there are always companies that will need private cloud facilities.
“That’s where we see the domestic market players need to strengthen their solutions. In terms of private cloud and hybrid cloud solutions to their customers or business can be residing in a private cloud but whenever the demand requires for them for additional capacity on demand then it can spill over to public cloud. The local boys need to look at that seriously.”
Talent is also a major issue, says Tan. “For any company to get into the cloud business you need to have people who understand the cloud and know how to keep it working. Unfortunately, our exchange rate between Malaysia and Singapore is making it very difficult to retain such people.
“They (Singapore) have a far bigger data centre industry which means there are more data centre and cloud jobs in Singapore than there are in Malaysia and they pay more so we have lost a lot of people. This is not a data centre challenge it is a whole Malaysia challenge so we need to figure out how to retain people,” he concludes.